WEEK 1

Why Companies Go Global

1. Domestic market saturation
- When the market has matured domestically
2. Economies of scale
3. Lower production cost
4. Hedge against recession
- Avoid recession
5. National interest
6. Geographic diversification
7. Foreign competition in the domestic market
8. Absence of competition overseas
9. To capitalize on overseas incentives

Strategic Thrust – Shape the direction of the marketing plan by deciding which markets to target and
which products to sell
- Market orientation: Existing or new/related
Market penetration ; company goes to market with same product with lower cost
- Products orientation: Existing or new/related

Example of polygon bikes :

Value Chain – Marketing and other business aspects that create value for the customer
Value Proposition - Perceived value to customer and the firm’s promise to the customer

Customer Perceived Value

● Not always about the money, but also about the effort.
➢ Create value for customers by improving benefits or reducing price
○ Improve the product
○ Find new distribution channels
○ Create better communications
○ Cut monetary and non-monetary costs and prices

Value = Benefits/Price
Globalization
- A company is global to the extent that a company’s industry position in one country is
interdependent with its industry position in another country
(ex: problem in particular country that may disrupt the whole business (strike in US stopped the
supply chain) risk or also able to support production)
- When target is bigger, promotion is more important

- Not every company thinks that they need to be in every market

STANDARDIZATION vs ADAPTATION
1. Globalization (Standardization)
 - Developing standardized products marketed in a mass with a standardized marketing mix
2. Glocalization (Adaptation)
- Mixing standardization and customization in a way that minimizes costs while maximizing
satisfaction
- For segmentation
- Think globally, act locally

Management Orientation

Globalization Process

Management Orientation
● Ethnocentric Orientation
Export Orientation – Believing that the products they sell domestically can be sold elsewhere
- They believe home country is superior
- They only see similarities in other countries
● Polycentric Orientation
Polycentric orientation refers to a predisposition of a firm to the existence of significant local
cultural differences across markets.
- Adaptation is important

Regiocentric Orientation

Geocentric Orientation

Restraining Forces
● Management Myopia
e.g. politicians to gain votes to win (sweet promise, janji manis)
● Organizational Culture
○ Ethnocentric
● National control
○ Some companies deal with natural resources are not allowed to export their product
○ Regulatory only forces them to cater the domestic
● Opposition to globalization
○ In short → anti globalization
 CHAPTER 1
Introduction to Global Marketing

Marketing – The activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and society

Marketing Mix – Four Ps is a contemporary marketer’s primary tools

Global Marketing – Focuses its resources and competencies on global market opportunities and threats
- The difference between regular marketing is the scope of activities

Product/Market Matrix

1. Market Penetration
- Existing market – existing product
- Ex: Starbucks building loyalty programs in the US with a smartphone app
2. Market Development
- New market – existing product
- Ex: Starbucks entering India through an alliance with Tata Group, sourcing coffee beans
in India
3. Product Development
- Existing market – new product
- Ex: Starbucks created a new instant coffee brand to enable customers to enjoy coffee
anywhere
4. Diversification
- New market – new product
 - Ex: Starbucks dropped the ‘coffee’ in its logo to introduce other lines of beverages that
are not coffee to attract new segments of consumers

Principles of Marketing – Surpass the competition by creating perceived value (superior value
proposition) for customers

Value = Benefits/Price (money, time, effort, etc.)

Competitive Advantage – Creating more value for customers than its competitors do in the industry

Economic Globalization – Integration of national economies into the international economy through
trade, direct foreign investment, short-term capital flows, international flows of workers, and flows of
technology

Single Country Marketing vs Global Marketing Strategy (GMS)

- Concentration of Marketing Activities

- The extent to which activities related to the marketing mix are performed in one or a few
country locations
- Ex: Promotional campaigns or pricing decisions
- Coordination of Marketing Activities
- The extent to which marketing activities related to the marketing mix are planned and
executed interdependently around the globe
- Integration of Competitive Moves
- The extent to which a firm’s competitive marketing tactics in different parts of the world
are interdependent

Global Localization – Think globally, act locally (conduct both standardizations and localization)
Management Orientation
1. Ethnocentric Orientation
- The believe that their home country is superior to the rest of the world
- Feels indifferent to marketing opportunities outside their home country
- Perceive that success in the home country will succeed anywhere too
- Standardization approach
- Ex: Nissan exported cars designed for mild Japanese winters, the vehicles were difficult
to start in the US during cold winter

2. Polycentric Orientation
- How a company does business in each country is unique
- Multinational company
- Localized approach
- Ex: Unilever’s advertisement is executed on a local basis

3. Regiocentric Orientation
- The goal is to develop an integrated regional strategy
- Could be America regiocentric, or Europe regiocentric
- Ex: General Motors executives in different parts of the world were given autonomy when
designing vehicles for their respective regions

4. Geocentric Orientation
- Views the entire world as a potential market and strives to develop integrated global
strategies
- Global or transnational company
- Owns an HQ
- Use both standardization and localization
- Ex: Uniqlo sources its apparel from low-wage countries then delivers to stores

Forces Affecting Global Integration and Global Marketing

1. Multilateral Trade Agreements
- Accelerates the pace of global integration
- Ex: NAFTA, GATT, WTO, EU single currency

2. Converging Market Needs and Wants and the Information Revolution

- Marketing changes behavior in consumption
 - Ex: Dulu gaada orang yang butuh minum softdrinks, sekarang softdrink consumption
bisa melebihi water consumption
- Information revolution (democratization of information)
a. Compare lifestyle between nations
b. Publish a website → company becomes global
c. Allows people to reach out, buy, and sell virtually

3. Product Development Costs

- The pressure for globalization is intense when new products require major investments
and a long development period
- Ex: The cost of developing a new drug is huge and regulatory approval may take 14
years, thus pharmaceutical companies expand to new markets to cover development
costs

4. Quality
- Global marketing can generate greater revenue that can support design and product
quality
- Ex: The US car manufacturers market share decreases as Japanese cars built reputation
for quality and durability

5. World Economic Trends

a. Economic growth in key developing countries creates market opportunities
b. Economic growth has reduced resistance that might otherwise have developed in
response to the entry of foreign firms into domestic economies
- Growing country → Growing market
- Policymakers may create laws that allow global companies to enter without
threatening local companies
c. Worldwide movement toward free markets, deregulation, and privatization
- Privatization → Opening up formerly closed markets
- Ex: When a nation’s telephone company is a state monopoly, the government
can require it to buy equipment and services from national companies

6. Leverage
- An advantage that a company enjoys from having experience in other countries
a. Experience transfers
b. Scale economies
c. Resource utilization
 d. Global strategy

7. Restraining Forces
- Factors slowing a company’s efforts in global marketing
a. Management myopia and organizational culture
- Ignores opportunities to expand globally
- No knowledge of integrating global vision with local initiatives
b. National controls
- Control from the government
- Ex: Nontariff barriers, quota
c. Opposition to globalization
- Globaphobia, hostility toward trade agreements, global brands
- Ex: In the US, some people believe that globalization has depressed the
wages of American workers

Why Companies Go Global

1. Domestic market saturation
- When the market has matured domestically
2. Economies of scale
3. Lower production cost
4. Hedge against recession
- Avoid recession
5. National interest
6. Geographic diversification
7. Foreign competition in the domestic market
8. Absence of competition overseas
9. To capitalize on overseas incentives
 CHAPTER 2
The Global Economic Environment

Economic systems

Criteria
1. Type of economy
- Advanced industrial state?
- Emerging economy?
- Transition economy?
- Developing nation?
2. Type of government
- Monarchy?
- Dictatorship?
- Tyrant?
- Autocratic?
- Dominated by another state?
- Democracy?
- Unstable or terrorist nation?
3. Trade and capital flows
- Free trade?
- A part of a trading bloc?
- A currency board?
- Exchange controls?
- The government dominates trade possibilities?
4. Commanding heights (transportation, communications, energy sectors)
- State-owned?
 - Private ownership?
5. Services provided by the state and funded through taxes
- Pensions, health care, and education provided?
- Do privatized systems dominate?
6. Institutions
- Is the nation characterized by transparency?
- Corruption?
7. Markets
- Free market system?
- Monopolies?
- Government control?

Market Capitalism – Individuals and firms allocate resources and production resources are privately
owned
- Consumers decide what goods they desire
- Firms determine what and how much to produce the goods

Centrally Planned Socialism – The state has broad powers to serve the public interest as it sees fit
- The government decides what goods to produce
- Consumers spend their money on what is available

Centrally Planned Capitalism and Market Socialism – Command resource allocation is utilized
extensively in an overall environment of private resource ownership

Market Socialism – Market-allocation policies are permitted within an overall environment of state
ownership

Stages of Market Development

1. Low-Income Countries – GNI per capita of ≤ $1,045
a. Limited industrialization
b. High birth rates, short life expectancy
c. Low literacy rates
d. Heavy reliance on foreign aid
e. Political instability and unrest
f. Concentration in Africa south of the Sahara
2. Lower-Middle-Income Countries – GNI per capita of ≥ $1,046 but ≤ $4,125
a. Consumer markets expanding rapidly
 b. Cheap labor resources
3. Upper-Middle-Income Countries – GNI per capita ≥ $4,126 to ≤ $12,745
a. High literacy rates
b. Strong education systems
c. Wages are rising but significantly lower
4. High-Income Countries – GNI per capita ≥ $12,746
a. Developed countries
b. Intellectual technology > machines
c. Skilled workers
d. Places importance in interpersonal relationships
e. Products depend on innovations

Balance of Payments – A record of all economic transactions between the residents of a country and the
rest of the world

Economic Exposure – The impact of currency fluctuations on a company’s financial performance

- Occur when a company’s transactions result in sales denominated in foreign currency

Hedging – The loss or gain of one currency position is offset by a corresponding gain or loss in some
other currency
- Porsche manufactures in EU but sales most of their cars in the US
 CHAPTER 3
Global Trade Environment

General Agreement on Tariffs (GATT) – Was established to regulate trade among countries, the first
trade organizations

GATT → World Trade Organization (WTO) (1995)

Free Trade Areas – When 2 or more countries agree to eliminate tariffs and other barriers that restrict
trade

Customs Union – Trade bloc with free trade areas and common external tariffs (CET)

Common Market – Allows for free movement of factors of production (labor and capital) & FTA & CET

Economic Union – The elimination of internal tariff barriers, the establishment of common external
barriers, and the free flow of factors
- Creation of a unified central bank
- The use of a single currency
- Common policies on agriculture, social services, welfare, regional development, taxation,
transport, mergers, competition
- Ex: EU

Association of Southeast Asian Nations (ASEAN)

- Established in 1967
- Members: Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Cambodia,
Laos, Myanmar
- Active in regional and global trade especially with Japan, the EU, China, and the US
 - Developed ASEAN Free Trade Area (AFTA)
- ASEAN +6 – Japan, China, Korea, India, New Zealand, and Australia entered the agreement
- January 1, 2010 – Establishment of China/ASEAN FTA
- Benefits commodity exports
- Rises concerns for a flood of low-cost Chinese imports
- Singapore is a special case among ASEAN nations
a. Accounts for ⅓ of US trading activities with ASEAN countries
b. 32% of imports are reexported to other Asian countries
c. Crime is nearly nonexistent
- Issues:
a. Lack of harmonization, bureaucracy
- ASEAN is not a customs union, imports/exports require different procedures
among nations
b. Complex labor laws
- Asia-Pacific Economic Cooperation (APEC)
- Brings 19 leaders into a forum to discuss economic and trade-related issues

How Free Trade Helps During the Pandemic

1. Increased access to essential goods
2. Reduced costs by eliminating tariffs
3. Increased economic growth during economic downturn due to COVID
4. Greater coordination and cooperation among members
- EU facilitates the flow of essential goods, such as medical supplies and PPE
- EU coordinates the procurement of vaccines
 CHAPTER 4
Social and Cultural Environments

Culture – The ways of living, built up by a group of human beings that are transmitted from one
generation to another
1. Material culture – Artifacts
2. Nonmaterial culture – Religion

Attitude – A general feeling or opinion about something

- Ex: A person might have a positive attitude towards helping others. This means that they
generally enjoy helping others and are willing to do so.
- Ex: Respect for elders in Japanese culture

Belief – A conviction that something is true

- Ex: A person might believe that helping others is the right thing to do. This means that they think
it is morally or ethically correct to help others.
- Ex: Elders are wise and experienced, and their guidance should be valued

Values – An enduring belief that is socially preferable

- Ex: A person might value compassion. This means that they consider compassion to be an
important quality.
- Ex: Filial piety, obedience

Values → Belief → Attitude

Subcultures – Smaller groups of people with their own shared subset of attitudes, beliefs, and values

Cultural Influences
1. Religion
- Ex: McDonalds does not serve burgers in India because Hindus do not eat beef
2. Aesthetics (colors, packaging)
- Ex: The color red in Indonesia means courage, so energy foods tend to use red
3. Dietary preferences
- Ex: Domino’s Pizza pulled out of Italy because Italians perceived Domino’s as too
American
4. Language and communication
 - Ex: Bowing in Japan is an important aspect of nonverbal communication

High and Low Context Culture

1. Low-Context Culture – Messages are explicit and specific, words carry the communication
- US, Germany
2. High-Context Culture – Communication is inferred from non-verbal cues, such as body
language, and relationships
- Japan, Indonesia

Hofstede’s Cultural Typology

1. Individualism vs Collectivism
a. Individualistic – People look after their own and family interests
- US, Canada, Australia
b. Collectivistic – People expect the group to look after and protect them
- Mexico, Thailand
2. Power Distance
a. High power distance – Accepts wide differences in power; a great deal of respect for
those in authority
- Mexico, Singapore, France
b. Low power distance – Plays down inequalities; employees are not afraid to approach
nor are in awe of the boss
- US, Sweden
3. Uncertainty Avoidance
a. High uncertainty avoidance – Threatened with ambiguity and experience high levels of
anxiety
- Italy, Mexico, France
b. Low uncertainty avoidance – Comfortable with risks; tolerant of different behavior and
opinions
- Canada, US, Singapore
4. Masculinity vs Femininity
a. Achievement (Masculinity) – Values such as assertiveness, acquiring money and
goods, and competition prevail
- US, Japan, Mexico
b. Nurturing (Femininity) – Values such as relationships and concern for others prevail
- France, Sweden
5. Long-Term vs Short-Term Orientation
a. Long-term orientation – People look to the future and value thrift and persistence
 - China, Taiwan, Japan
b. Short-term orientation – People value tradition and the past
- Germany, Australia, US, Canada

Self-Reference Criterion and Perception

- An unconscious tendency to reference one's own cultural values, experiences, and knowledge as
a basis for decisions
- Ex: Barbie an American doll company made the exact same dolls with blonder hair in Japan
- How to solve:
a. Define the problem in terms of home-country traits
b. Define the problem in host country traits
c. Isolate the SRC influence
d. Redefine the problem without the SRC influence and solve for the host-country market
situation

Adoption Process (Diffusion Theory)

1. Awareness
- Customer encounters the product for the first time
- Create advertising messages
2. Interest
- Customer is interested enough to learn more
- Customer engages in research
3. Evaluation
- Customer mentally assesses the product’s benefits
- May compare with competitors or existing products
4. Trial
- Customer tries hands-on experience with the product
- Through samples or if it's cheap they’ll buy it
5. Adoption
- Customer decides to make a purchase or repurchase

Characteristics of Innovation
1. Relative Advantage
- How new products compete with existing products
- Ex: Apple’s newest iPhones must have a new feature to be seen as worth the value
2. Compatibility
 - The extent to which a product is consistent with existing values and experience
- Ex: iPhones design changes over the years but it’s consistent with their minimalistic
design
3. Complexity
- The degree to which an innovation is difficult to understand and use
- Ex: iPhone 14’s dynamic island might be difficult for new users to comprehend
4. Divisibility
- The ability of a product to be broken down and used on a limited basis without a great
expense
- Ex: Apple products can be purchased individually or integrated into one big ecosystem
(macbook, iPad, airpods, iPhone, etc.)
5. Communicability
- The degree to which the benefits of an innovation can be communicated to the market
- Ex: Apple’s marketing campaigns for their products are effective

Adopter Categories

1. Innovators (Tech enthusiasts)

- The first people to adopt new technology
- Small portion of the market
- Appreciate the technology itself for its own sake
- Pose fewer requirements than other groups because they like the technology
- Must not ignore the issue that is important to them because they provide helpful feedback
for the tech industry and the company
How to treat:
- Tell the truth
- Never sugarcoat
- When they have a tech problem let them have access to the most technically
knowledgeable person to answer it
- Provide them a free demo or webinar
 2. Early Adopters (Visionaries)
- People who have the insight to match up an emerging technology to a strategic
opportunity
- Opinion leaders
- Not looking for an improvement
- Focus on value, not the tech itself (unlike innovators)
- Tend to have a lot of budgets to allocate a generous amount of money
How to treat:
- Set a deadline to rush to buy the product
- They have to be hurry before the majority comes

3. Early Majority (Pragmatists)

- Driven by strong sense of practicality
- Wants references before investing in the product
- Important market for substantial profits and growth
- They want a percentage of improvements (unlike early adopters)
How to treat:
- Standardize the product
- Lower price

4. Late majority (Conservatives)

- They wait until something has become an established standard
How to treat:
- Provide every element needed within the package
- Line up a low-overhead distribution channel so they can buy the product easily
(accessible)

5. Laggards (Skeptics)
- Don’t want anything to do with new technology
- Market segment not worth pursuing
How to treat:
- Cost justification
- Do not deliver on the promises that were made at the time of their purchase
- Let them explore on their own

Asian Hierarchy
Environmental Sensitivity
- The extent to which a product must be adopted to the nation’s culture
- High sensitivity → More adaption
 CHAPTER 5
Political, Legal, and Regulatory Environments

Political Environment – Governmental institutions, political parties, and organizations through which a
country’s people and rulers exercise power

Sovereignty – Supreme and independent political authority

- Make its own laws
- Govern its own people
- Conduct its own foreign policy
- Enter into treaties with other states
- In International Context:
a. Regulated trade
b. Managed the flow of people in and out of its boundaries
c. Exercised undivided jurisdiction over all persons and property
d. Had the right, authority, and ability to conduct domestic affairs without outside
interference
e. Privatization is a global trend affecting sovereign power
- Challenges
a. Globalization
- Minimizes the power of the state as they are no longer able to control the flow of
goods, information, and people
b. Regional integration
- States giving up their power to regional institutions (EU)

Political Risks – Change in a country’s political environment or policy that would affect a company
Taxes
- Governments rely on tax revenues for the funds of social services, the military, etc.
- Tax policies on sales of goods and services motivate companies to profit by not paying taxes
- High taxes and VAT encourage smuggling, cross-border shopping
- Many companies minimize tax liability by shifting the location of income
- Ex:
a. Offshore tax haven
- Placing subsidiaries in regions with low tax rates, financial privacy, and
lenient financial regulations
b. Transfer pricing
- A multinational corporation sells goods to its subsidiary in a tax haven at
a low price. The subsidiary then sells the goods to customers in other
countries at a higher price. The profits from the sale are booked in the
tax haven with little to 0 taxes

Seizure of Assets
1. Expropriation
- Taking private property for public use with compensation
- Legal processes typically used by governments to acquire assets for public projects
2. Confiscation
- Seizure of property by the government without compensation
- Typically used as a punishment for criminal activity
3. Nationalization
- The process of bringing a privately owned industry or asset under government ownership
- Can be done through purchases of shares, acquiring assets, or simply declaring

International Law
- Property, trade, immigration, etc.

Common Law vs Civil Law

1. Private international law – Apply to disputes arising from commercial transactions between
companies from different nations
2. Civil-law country – The legal system reflects the structural concepts and principles of the
Roman Empire in the 6th century
- Comprehensive and inclusive
3. Common-law country – Based on judicial precedent (past court decisions), using stare decisis
 4. Codification – Common law countries rely on case law, while civil law countries have
comprehensive legal codes

Islamic Law – Sharia, a comprehensive code governing Muslim conduct in all areas of life, including
business
- From the Quran and hadith

Intellectual Property
1. Patent
a. Purpose: Patents are granted to protect inventions and innovations. They provide
exclusive rights to the inventor for a limited period, typically 20 years, during which the
inventor has the exclusive right to make, use, sell, and license the patented invention.
b. What it Protects: Patents protect new and useful processes, machines, products, and
compositions of matter.
2. Trademark
a. Purpose: Trademarks are used to protect symbols, names, logos, or other distinctive
marks that distinguish the source of goods or services.
b. What it Protects: Trademarks protect branding elements that represent products or
services in the marketplace.
3. Copyright:
a. Purpose: Copyrights protect original creative works of authorship. They provide creators
with exclusive rights to reproduce, distribute, display, and adapt their works.
b. What it Protects: Copyrights cover literary works, music, art, software, films, and other
creative expressions.

Antitrust laws
- A set of regulations designed to promote and maintain fair competition in the marketplace while
preventing anti-competitive practices that harm consumers, businesses, and the overall economy

Licensing – A legal agreement between the owner of intellectual property (IP) and another party that
allows the second party to use, distribute, or benefit from the IP in exchange for certain terms, conditions,
and often, financial compensation
1. Patent Licensing: Patent holders can grant licenses to others, allowing them to make, use, sell,
or import the patented invention. This is common in industries such as technology and
pharmaceuticals.
2. Trademark Licensing: Trademark owners permit other businesses to use their registered
trademarks, logos, or brand names in association with specific goods or services.
 3. Copyright Licensing: Authors, artists, and creators may license their copyrighted works for
various purposes, like publishing, reproducing, distributing, or performing the work.
4. Software Licensing: Software companies often license their software to end-users, specifying
terms of use, distribution, and potential limitations.
Components
1. License grant
2. Royalties and fees
3. Duration
4. Territory
Benefits
1. Revenue
2. Market expansion
3. Innovation
 CHAPTER 6
Global Information Systems and Market Research

IT – An organization’s process for creating, storing, exchanging, using, and managing information

Management Information System (MIS) – A system of hardware and software of a company

- Gathering, analyzing, classifying, storing, retrieving, and reporting data

Big Data – Extremely large data sets that can be subjected to computation analysis to reveal patterns
and trends

Intranet – A private network that allows authorized company personnel or outsiders to share information
electronically in a secure fashion without generating papers
- A 24-hour nerve center
- Allows a company to operate as real-time enterprises (RTEs)

Electronic Data Interchange (EDI) – Allows a company’s business unit to submit orders, issue invoices,
and conduct business electronically with other company units as well as with other companies
- Improves inventory management and restocks

Efficient Consumer Response (ECR) – Joint initiative of members of supply chain to benefit customers
- Utilizes electronic point of sale (EPOS) – Data gathered by checkout scanners to help retailers
identify product sales patterns and consumer preferences

Customer Relationship Management (CRM) – Two-way communication between company and

customers
- Allows companies to determine which customers are valuable and react in a timely manner with
customized product and service that matches the customers’ needs
- Enhance profitability and employee productivity
- Benefits customers by providing value-added products and services

Sales Force Automation (SFA) – A software system that automates routine aspects of sales and
marketing functions such as lead assignment, contact follow-up, and opportunity reporting

Global Organization Needs

1. Efficient, effective system that will scan and digest published sources in home and host countries
 2. Daily scanning, translating, digesting, abstracting, and electronic inputting of information into a
market intelligence system
3. Expanding information coverage in other regions of the world

Sources of Market Information

1. Personal sources
2. Outside sources
a. Customers, government, suppliers
3. Direct sensory perception
a. Information gathered from seeing, feeling, hearing, smelling, and tasting

Market Research
1. Study with in-house staff
2. Outside firm specializing in market research
3. Or both

Market Research Process

1. Information Requirement
a. Market potential
i. Demand estimates
ii. Review of products
iii. Consumer behavior
iv. Communication media
b. Competitor information
i. Corporate business
ii. Functional strategies
iii. Resources and intentions
iv. Capabilities
c. Foreign exchange
i. Balance of payments
ii. Interest rates
iii. Attractiveness of country currency
d. Prescriptive information
i. Laws, regulations
ii. Taxes and earnings
e. Resource information
i. Availability of CELL and information
 f. General conditions
i. Overview of sociocultural, political environment
2. Problem Definition
- Utilize self-reference criterion (chapter 4)
3. Choose Unit of Analysis
- What part(s) of the world a company needs
- Global
- Country
- Region
- Subgroups in a country
4. Examine Data Availability
a. Secondary data
5. Assess Value of Research
a. Primary data
i. Determine costs, time, and method
6. Research Design
a. Data gathering through primary resources
i. Use multiple indicators rather than a single measure
ii. Develop customized indicators specific to the industry, product, market, or
business model
iii. Conduct comparative assessments in multiple markets
iv. Observations of purchasing patterns and other behavior should be weighted
more heavily than reports or opinions regarding purchase intention or price
sensitivity
b. Should address
i. Consumer understanding: to “get close” to the consumer
ii. Describe the social and cultural contexts of consumer behavior (cultural,
religious, political) that impact decision-making
iii. Identify core-brand equity
iv. Identify what people really feel
c. Issues
i. May be too narrowly focused on a market
ii. No existing market to research/latent market (delve into potential market)
iii. Incipient market – A market that will emerge if a situational trend continues
d. Methodologies
i. Survey
ii. Consumer panel (tracking behavior over time)
 iii. Observation
iv. Focus group discussion
e. Scale development
- Assign measure, ranking, or interval to a response
- Ex: Likert scale
f. Sampling
i. Probability sampling
ii. Non-probability sampling
7. Data Analysis
a. Factor analysis D:
- Transform large amounts of data into manageable units

b. Cluster analysis
- Group variables into clusters that maximize within-group similarities
- Groups customers
8. Interpretation and Presentation

Emic Analysis – Comparing a country’s data with the host country's data
Etic Analysis – Comparing a country's data with another country’s data
 CHAPTER 7
Segmentation, Targeting, and Positioning

Global Market Segmentation – Identifying specific segments by country groups or individual consumer
groups
a. Demographics
b. Psychographics
c. Behavioral characteristics
d. Benefits sought

Demographic Segmentation – Based on measurable characteristics of populations

a. Income
b. Population
c. Age distribution (global teens, global elite)
d. Gender
e. Education
f. Occupation
g. Specific trends: Fewer married couples, smaller family size, changing roles of women, higher
living standards

Psychographic Segmentation – Based on attitudes, values, and lifestyles

- Ex: European consumers
1. Successful idealists – People who have achieved professional and material success with
socially responsible ideas
2. Affluent materialists – People who are business professionals with conspicuous
consumption to communicate wealth with others
3. Comfortable belongers – Conservative, and most comfortable with the familiar
4. Disaffected survivors – Lacking power and affluence, harbors little hope for upward
mobility

Behavior Segmentation – Focuses on whether people buy and use a product, and how often and how
much they use or consume
a. Usage rates
i. Law of disproportionality (Pareto’s law)
- 80/20 rule, 80% of the company’s revenues are accounted for by 20% of the
firm’s products or customers
 - Should a company stay with the existing market or expand that may contribute
little to revenues?
b. User status (potential, nonusers, ex-users, regulars, first-timers, users of competitors)

Benefit Segmentation – Focuses on the problem a product solves, the benefit it offers, or the issue it
addresses, regardless of geography

Ethnic Segmentation – Typically applies to a country with a large population of ethnic groups like the US

Assessing Market Potential

1. Is the market segment currently large enough to profit?
2. Does it have significant growth potential to make it attractive in long-term strategy?
3. Potential competition?
4. CAN the company target the market? Is it compatible?

Marketing Model Drivers – Key factors required for a business to take root and grow in a particular
country environment

Enabling Conditions – Structural market characteristics whose presence or absence can determine
whether the marketing model can succeed
- Ex: Refrigeration is widely not available in shops and food stalls, creating a challenge for Nestle
to target India’s increasing appetite for chocolate milk

Product-Market Profile
1. Who buys our product or brand?
2. Who does not buy our product or brand?
 3. What need or function does our product serve? Does our product or brand address that need?
4. Is there a market need that is not being met by current product or brand offerings?
5. What problem does our product solve?
6. What are customers currently buying to satisfy the need, or solve the problem, that our product
targets?
7. What price are they paying for the product they are currently buying?
8. When is our product purchased?
9. Where is our product purchased?

Product-Market Grid – The suitability of a product with the potential market

Targeting – Pursuing a segment opportunity

a. Standardized global marketing
b. Concentrated global marketing
c. Differentiated global marketing

Standardized Global Marketing – Analogous to mass marketing in a single country

- Creating the same marketing mix for a broad mass market of potential buyers
- Product adaptation is minimized
- Lower production costs
Concentrated Global Marketing – Devising a marketing mix to reach a niche
- Strives for global depth rather than national breadth
- Ex: Chanel focuses on product quality and narrow distribution to high-end retailers, they don’t go
mass

Differentiated Global Marketing – Entails targeting two or more distinct market segments with multiple
marketing mix offerings
- Ex: Danone has premium bottled water like Evian and Aqua

Positioning – The act of differentiating a brand in customers’ minds in relation to competitors in terms of
attributes and benefits a brand offers and does not offer
a. Attribute or benefit
b. Quality and price
c. Use or user
- How a product is used or class of users
d. Competition

Global Consumer Culture Positioning (GCCP) – A strategy that identifies a brand as a symbol of a
particular global culture or segment
- Ex: Coca-Cola's "Open Happiness" campaign is a classic example of GCCP, as it emphasizes
universal feelings of joy and happiness that can be understood and appreciated across different
cultures

Foreign Consumer Culture Positioning (FCCP) – Associates the brand’s users, use occasions, or
production origins with a foreign country or culture
- Ex: McDonald's is known for adjusting its menu to cater to local tastes in various countries. For
instance, offering "Nasi Uduk" in Indonesia aligns with local food preferences

Local Consumer Culture Positioning (LCCP) – Associates the brand with local cultural meanings,
reflects the local culture’s norms, portrays the brand as consumed by local people in the national culture,
or depicts the product as locally produced for local consumers
- Ex: Toyota's marketing in Japan often highlights its heritage as a Japanese company, which can
resonate with Japanese consumers

Use the perceptual map

 CHAPTER 8
Importing, Exporting, and Sourcing

Export Selling
- Does not tailor products or price or promotional material
- Works for products with little competition

Export Marketing
- Targets customers in the context of the market environment
- Modified and adapted products
- Sets price according to target market
- Adjusts communication strategies

Market Visit
1. Confirm or contradict assumptions regarding market potential
2. Gather additional data necessary to reach a decision
3. Conduct negotiations
4. Develop a marketing plan with a local distributor
- Ex: Trade show (fair; kyk booth), trade mission (coordinated by government)

Why are Marketers Specialized? (Products Exporting)

a. Because of limited resources & facilities
- Some products need special handling and the investment for these facilities may be high
b. Market knowledge and so that they have leverage
- USP
- Know what’s acceptable in the market
- Supply something that has not existed in the market

Why is This Important?

1. Conduct market assessment
2. Decide the direction of market development
3. Find distributors or agents
4. Locate potential end users
5. Obtain a general impression of competition
Export Activities Stages
1. Firm is unwilling to export (lack of time or ignorance)
2. Firm fills unsolicited export orders but does not pursue unsolicited orders (export seller)
3. Explores the feasibility of exporting
4. Exports to one or more markets on a trial basis
5. Firm is an experienced exporter to one or more markets
6. Firm pursues the country or region-focused marketing based on certain criteria
- English-spoken countries or transport-specific exports
7. Firm evaluates global market potential before screening the best target market

Potential Export Problems

Logistics Servicing Exports

Arranging transportation Providing parts availability

Transport rate determination Providing repair services

Handling documentation Providing technical advice

Obtaining financial information Providing warehousing

Distribution coordination Sales promotion

Packaging Advertising

Obtaining insurance Sales effort

Legal procedures Marketing information

Government red tape Foreign market intelligence

Product liability Locating markets

Licensing Trade restrictions

Customs/duty Competition overseas

Contract

Agent/distributor agreements
National Policies Governing Exports and Imports
1. Government programs that support exports
a. Tax incentives – Applying lower rates to earnings or refunding taxes paid on income
associated with exporting
b. Subsidies – Direct or indirect financial contributions that benefit producers
c. Governmental assistance – Provide information concerning the location of markets and
credit risks
d. Free trade zones (FTZ) or Special economic zone (SEZ)

2. Government Discouraging Imports and Block Market Access

a. Tariffs – Rules, rate schedules (duties), regulations of individual countries
b. Nontariff Barrier (NTB) – Any measure other than a tariff that is an obstacle to the sale
of products in a foreign market
i. Quota – Limit of units that can be imported
ii. Discriminatory procurement policies – Government rules or administrative
regulations requiring that goods be purchased from domestic countries
iii. Restrictive customs procedure
- Antidumping regulations
- Product size regulations
- Safety and health regulations
iv. Arbitrary monetary policies
v. Restrictive regulations

Tariff Systems
1. Single-Column Tariff – A straightforward tariff system where a single rate of duty is applied to all
imported goods, regardless of their origin
2. Two-Column Tariff – General duties and an additional fee or specific duties
3. Normal Trade Relation – Under the WTO, nations agree to apply their most favorable tariff or
lowest tariff to all nations that are signatories to WTO
4. Preferential Tariff – Reduced rate applied to imports from certain countries
- GATT prohibits the use of this except:
a. Historical preferences arrangements existing before GATT
b. Arrangements that are part of a formal economic integration treaty (FTA or
common markets)
c. Industrial countries to companies based in less-developed countries
Customs Duties
1. Ad Valorem Duty – A tariff or customs duty that is calculated as a percentage of the value of the
imported goods
- Ex: If a country imposes a 10% ad valorem duty on imported electronics, and the
declared value of the imported electronics is $1,000, the duty would be $100 (10% *
$1,000).
2. Specific Duty – A fixed, predetermined amount of duty charged per unit of the imported goods,
regardless of their value
- Typically based on volume, weight, or quantity
- Ex: If the specific duty for imported bicycles is $20 per bicycle, every bicycle imported
into a country will incur a $20 duty, irrespective of its market price

Other Duties and Import Charges

1. Dumping – When a foreign country exports goods to another country at a price lower than the
price it charges in its domestic market
- This harms the domestic market because of price competition
2. Antidumping Duties – Tariffs imposed by the government that make imported goods more
expensive than domestic goods
3. Countervailing Duties (CVDs) – Tariffs imposed by the importing country in response to unfair
subsidies given to foreign producers by their governments
- Ex: Govt. A provides subsidies for the export of solar panels. Country A exports solar
panels to Country B, which are priced lower due to the subsidies. Producers of solar
panels in Country B struggle to compete with the low-priced solar panels from Country A
4. Variable Import Levies – Tariffs imposed on the import of agricultural products
- Typically in EU countries to not disrupt local agricultures

Key Export Participants

1. Foreign Purchasing Agents – Agents located in foreign markets who assist local companies in
purchasing products or materials from international suppliers
- Often represent governments, utilities, railroads, etc.
- Ex: Agent dari USA bantu companies from Brazil to buy goods from the US
2. Export Brokers – Intermediaries between sellers and buyers in international trade
- Help businesses find overseas markets for their products or connect them with foreign
buyers
3. Export Merchants – Purchase goods from domestic suppliers and then sell them to foreign
customers
 4. Export Management Company (EMC) – Firms that provide comprehensive export services on
behalf of other businesses
- Handles exporting, logistics, marketing, etc.
5. Export Distributor – Purchase products from manufacturers and sell them in foreign markets
6. Export Commission Representative – Work on a commission basis, connecting exporters with
potential buyers or distributors
7. Cooperative Exporter – Groups or associations of producers or businesses that collaborate to
export their products collectively
- Helps smaller businesses to enter foreign markets
8. Freight Forwarders – Specialize in managing the logistics and transportation of goods in
international trade
- Handles shipping, customs clearance, warehousing

Organizing for Exporting

1. Direct Market Representation – ​Involves a company establishing its own presence in a foreign
market without relying on intermediaries or third parties
- Setting up subsidiaries, branch offices, or representative offices
- Adv:
a. Greater control
b. Brand consistency
c. Higher profits
- Considerations:
a. Higher costs
b. Risks and challenges
c. Resource requirements
2. Independent Intermediaries – Third-party entities that help a company enter and operate in a
foreign market
- Adv:
a. Local knowledge
b. Cost-effective entry
c. Established network
- Considerations:
a. Loss of control
b. Shared profits
c. Conflict of interest (from representing many companies)
Methods of Payment
1. Documentary Credit – A financial instrument issued by a bank on behalf of the buyer (importer)
that guarantees payment to the seller (exporter)
- Advantages: Offers a high level of security for the seller and assures payment upon
complying with the terms of the credit
- Considerations: The process can be administratively complex and costly, and
discrepancies in the documents may lead to payment delays
2. Documentary Collections – Involve the use of banks to facilitate the exchange of shipping
documents and payment between the buyer and seller. Payment depends on the buyer's
willingness to pay upon presentation of documents.
- Advantages: Less costly and complex than a letter of credit
- Considerations: Payment is not guaranteed, and it relies on the trustworthiness of the
buyer. Discrepancies in documents may result in disputes and delays
3. Cash in Advance
- Advantages: The seller receives payment in advance and faces minimal risk
- Considerations: Buyers may find it less appealing due to the requirement for upfront
payment
4. Sales on Open Account – The seller ships the goods and delivers them to the buyer without any
payment being made at the time of the transaction. The buyer agrees to pay at a later, mutually
agreed-upon date
- Advantages: This method is simple and can facilitate trade with established, trusted
customers
- Considerations: It involves a higher level of risk for the seller

Outsourcing – Shifting production jobs or work assignments to another company to cut costs
- Factors:
a. Management vision
b. Costs and conditions (cheaper labor or resources)
c. Customer needs
d. Logistics
e. Country infrastructure
f. Political factors
g. Foreign exchange rates
- Can be as simple as cleaning the building, transport management, and customer service

Offshoring – Moving operations to another country

Outsource vs Offshore

Outsourcing Risks
1. Loss of core competencies
2. Mismatch of client-vendor priorities
3. Loss of know-how and innovative capabilities
4. Loss of flexibility with outsources
5. Feeling of being “locked in”
 CHAPTER 9
Global Market-Entry Strategies: Licensing, Investment, and Strategic Alliances

Licensing – A contractual arrangement whereby one company (the licensor) makes a legally protected
asset available to another company (the licensee) in exchange for royalties, license fees, or some other
form of compensation
- Advantages:
a. Avoid tariffs, quotas, or similar export barriers
b. Granted considerable autonomy and freedom to adapt the licensed goods to local tastes
- Disadvantages:
a. Offer limited market control because licensor may not become involved in licensee’s
marketing program
b. Potential returns from marketing may be lost
c. Agreement may have a short life if the licensor begins to innovate in the licensed product
or tech area (because licensees “borrow” the company’s resources and may exploit them
to their advantage)

Special Licensing Agreements

1. Contract Manufacturing – A business arrangement where a company (the client or brand
owner) outsources the production of its products to a third-party manufacturer (the contractor)
instead of producing them in-house
- The client retains control over product design, branding, and marketing
- The contractor specializes in production and may provide cost efficiencies, specialized
expertise, or access to different markets
- Common in industries like electronics, automotive, pharmaceuticals, and consumer
goods
- The client may benefit from reduced manufacturing costs and can focus on other aspects
of the business, such as marketing and distribution

2. Franchising – A company (the franchisor) licenses the rights to its business concept, brand, and
operating methods to independent entrepreneurs or business operators (the franchisees)
- Franchisees follow a proven business model, benefit from brand recognition, and receive
training and support from the franchisor
- The franchisor maintains control over the brand and provides ongoing assistance, such
as marketing, operations, and product supply
- Common in industries like fast food, retail, hospitality, and service businesses
 - Franchising allows for rapid expansion and risk-sharing between the franchisor and
franchisee

Foreign Direct Investment – Investment made by individuals, businesses, or governments into assets or
enterprises located in another country
- Advantages Host Country:
a. Economic growth
b. Infrastructure development
c. Knowledge and skills transfer
d. Global competitiveness
- Advantages Home Country:
a. Market access
b. Resource acquisition
c. Cost savings
d. Technology transfer
- Challenges:
a. Political and regulatory risks
b. Cultural and legal differences
c. Economic fluctuations
d. Operational challenges

Joint Ventures – Two or more parties come together to collaborate on a specific project, venture, or
business opportunity
- Types:
1. Equity Joint Venture – Participants create a new legal entity (e.g., a corporation or
partnership) and each holds a share of ownership in the joint venture
- Contribute both capital and resources to the new entity
2. Contractual Joint Venture – Parties agree to collaborate on a project without
necessarily forming a new legal entity
3. Limited Liability Joint Venture – This structure combines elements of both equity and
contractual joint ventures, allowing participants to limit their liability while collaborating on
a specific project
- Advantages:
1. Risk sharing
2. Access to expertise
3. Market entry
4. Resource pooling
 5. Risk diversification
6. Shared costs and investments
- Disadvantages:
1. Conflict and disagreements
2. Loss of control
3. Shared profits
4. Dependency on partners
5. Intellectual property concerns
6. Exit difficulties
7. Cultural and communication challenges

Investments – The allocation of financial resources into an asset, project, or venture with the expectation
of generating a return or gaining some benefit in the future
- Types:
1. Equity Stake – Acquiring a portion of ownership in a business or project by purchasing
shares or equity units
- An investor holds a percentage of ownership in the entity
2. Full Ownership – An individual has full ownership of the company, 100% control
a. Greenfield Investment – Starting a new business or project from scratch in a
foreign market
- Advantages:
1. Wealth generation
2. Diversify portfolio
3. Hedging against inflation (real estate, gold)
4. Liquidity
- Disadvantages:
1. Risk of loss
2. Volatility
3. Time commitment
4. Psychological factors

Global Strategic Partnerships / Strategic Alliances

- Characteristics:
1. Participants remain independent subsequent to the formation of the alliance
2. Participants share the benefits of the alliance as well as control over the performance of
assigned tasks
3. Participants make contributions in technology, products, and other areas
 - Success Factors:
1. Mission
2. Strategy
3. Governance
4. Culture
5. Organization
6. Management
- Challenges:
1. Must carefully select skills and technologies
2. Develop safeguards against unintended informal transfers of information
3. Limit transparency of their operation
- Ex: Chaebols in South Korea, Garuda Indonesia in Skyteam

Market Expansion Strategies

1. Narrow Focus
- Same market same country
- Targeting a limited number of customer segments in a few countries
2. Country Focus
- Same country new market
- A company serves many markets in a few countries
3. Country Diversification
- New country same market
- A company seeks out the world market for a product
4. Global Diversification
- New country new market
- Corporate strategy of a global, multibusiness company